This Time It's Different: Decoding the 2025 Altcoin Season Recipe

Bitcoin halving, all-time high, and altcoin season—the recipe for a bull run, or is it?

Bitcoin's halving event, all-time highs, and altcoin season—together, they form a recipe for a bull run, don't they? First, Bitcoin's halving reduces its issuance rate, which sparks a supply scarcity. After that, BTC rallies into its ATHs and is followed by a horde of pumped altcoins driven by investors who prefer higher, albeit riskier, returns. The altcoin season is then full on. Bitcoin had its most recent halving in May of this year, and soon after that, it smashed through the $100k mark—a historic milestone. Yet, the altcoin market is bleeding. Where is the usual rally? Is the golden recipe broken? The surge of institutional capital and the liquidity crunch from high interest rates, coupled with Trump's positive yet bold take on crypto, have made one thing certain: this cycle will be unlike any we’ve seen before.

How Is This Cycle Any Different?

Every cycle has four stages: accumulation, markup, distribution, and markdown. Even though the mechanism behind these stages is well-known, timing the market is one of the most sought-after skills. You try to predict when we enter a given stage to strategize your trades. However, even though cycles follow a predictable pattern, we must not forget the wider market context–and crypto has seen a lot in the past year.

Let's take a closer look at some of the key macro factors that are shaping the 2025 crypto cycle:

Institutions In The Bitcoin Market

The growing presence of institutional investors in the Bitcoin market has reshaped its dynamics. Having taken 7th place as the biggest asset in the world, Bitcoin has become a new asset of choice for institutions, supported by the emergence and growth of crypto ETFs. Their increased involvement often brings greater price stability. Yet, for altcoins, it may not be good news. After all, fluctuations and big corrections redirect capital flow into altcoins. Less volatility means fewer returns that could circle back into the altcoin market.

This year has been special. The launch of Bitcoin spot ETFs has brought a significant capital inflow from traditional finance onto the crypto market. Institutional inflows into these ETFs have triggered a Bitcoin supply shock, strengthening its dominance. The demand for Bitcoin caused by ETFs directly influences Bitcoin dominance, currently sitting at around 56%, a meaningful metric often overlooked by novice traders. It measures BTC's market share relative to altcoins, offering insights into whether we're in a Bitcoin season (BTC outperforms) or an altcoin season (altcoins outperform). What does a strong BTC dominance with a stable Bitcoin price mean? Altcoins dumping. And in this cycle, Bitcoin spot ETFs prolonged Bitcoin dominance. This new variable was absent in previous bull runs and will make the 2025 altcoin season undeniably unique.

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If you ask any financial executive about the most important financial metric, they’ll tell you it’s liquidity. In 2023 and 2024, the US interest rates hiked to one of the highest numbers in a long while. Even though it’s dropped from 5.25% a year ago to 4.19% now, it’s still a relatively attractive yield for a risk-free asset. On the other hand, cutting interest rates often fuels crypto bull runs for a very simple reason–they create a favorable environment for riskier assets to thrive. After all, risk-free government debt at a 0.11% yield, like in 2021, is as attractive as losing your capital due to inflation. Low rates equal cheaper borrowing and increased liquidity, which, in turn, pushes investors to park their money for higher returns. Where? Yes, you’ve guessed it. Crypto.

The winning of Trump’s administration in the US has undoubtedly shaken the crypto world. The Bitcoin Act sparked a lively debate across the crypto and non-crypto circles. If passed, the Senate legislation would require the Treasury and the Federal Reserve to purchase 200,000 bitcoins annually within a period of five years to accumulate one million bitcoins. In other words–about 5% of the global supply. Needless to say, pro-crypto regulations are a very meaningful step for the widespread adoption of crypto assets, and Trump’s stance has proven to ignite a positive sentiment, with BTC hitting its ATH shortly after the future President confirmed his plans to create a BTC federal reserve.

Zoom Out

With BTC keeping its dominance, high interest rates, and pro-crypto regulations in the US, should we expect a full-blown altcoin supercycle in 2025? That’s a